Mortgage arrears continue to grow as homeowners battle with debts
Submitted by admin on Wed, 05/27/2009 - 20:52
By Joe Brennan
Tuesday May 19 2009
Irish mortgage arrears tracked higher and the rate of loans being paid off ahead of schedule halved in the first quarter, as homeowners continued to struggle in a deep recession, according to Moody's.
Some 0.3pc of the country's 262,000 RMBS-related mortgages were over 360 days in arrears, which Moody's uses as a proxy for default, given that there isn't a culture of foreclosure in Ireland. This marks a three-fold increase in 12 months.
"This means that approximately 1,000 loans are heavily delinquent," the agency said.
"House price depreciation, rising unemployment and the slowdown of the financial sector have all contributed to a rapid fall in prepayment rates," Moody's said.
Moody's Economy.com expects that Irish house prices, which have fallen 18.5pc from their peak in early 2007, will not stop tumbling until they are 40pc from their highs.
It added that fiscal tightening may also send companies operating in Ireland to decamp to cheaper areas. The agency does not expect a fast recovery in household finances.
"Although prior strong house price growth has left plenty of equity cushions for mortgages originated a few years ago, the pace and the impact of the slowdown have been exceeding analysts' forecasts," Moody's said.